AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2017 (3) TMI 427
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.... is not liable to deduct TDS on agency discount u/s 194H of the I.T. Act. 2. The Ld. CIT(A) has erred in law and on facts in holding that assessee company has rightly deducted tax at source u/s 194J of the I.T. Act, 1961 on payments made to Radio Jockey. 3. The Ld. CIT(A) has erred in law and on facts in holding that the payments made to Radio Jockey by the assessee is not salary u/s 192 of the I.T. Act. 4. On the facts and in the circumstances of the case and in law, the Learned CIT(A) has erred in deleting the interest u/s 201(1A) of the IT Act, 1961 determined by the AO as the tax determined has already been deleted by her and interest deletion is consequential to the quantum deletion for which further appeal has been recommended vide ground Nos. (1), (2)& (3). 5. The appellant craves to leave or later any ground or add a new ground which may be necessary at the time of hearing of the case or thereafter. 6. The appellant craves to leave or alter any ground or add a new ground which may be necessary at the time of hearing of the case or thereafter. 4. Ground No.1: Revenue is aggrieved with the decision of Ld. CIT(A) in reversing the....
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....mission charged and the reimbursement of broadcasting charges after deduction of applicable TDS. Hence from- the above facts, it is very clear the ENIL does not pay the agency any commission, Hence the provision of TDS are not applicable on the same. The alleged discount is neither accounted as expenditure in the books of ENIL nor accounted as income in the books of agency. Reference may be made to decision of Allahabad High Court in the case of Jagran Prakashan Ltd vs. DCIT(TDS) wherein it was held that (i) To constitute "Commission or brokerage" u/s 194H, it is necessary that person receiving payment should be acting as agent and rendering services. The relationship between the assessee and the advertising agency in accordance with the Rules is that of a Principal to Principal because (a) the assessee has no control over the advertising agency, (b) the agency is responsible for payment even if the advertiser has not paid the advertising agency,(c) the advertising agencies are rendering service to the advertisers/customer & other terms. The "Discount "was not "Commission". • Reference may be made to the decision of The Kolkata income-Tax -Tribunal where it wa....
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....s important to note that explanation(...) to Section 194H reads a under:- "commission or brokerage" includes any payments received or receivable, directly or indirectly, by a person acting on behalf of another person for services rendered (not being professional services) or for any services in the course of buying or selling of goods or in relation to any transaction relating to any asset, Valuable article or thing, rot being securities. 10. In view of the above explanation as well as considering the facts of the case and after due consideration of the assessee submission it is held that assessee company liable to deduct TDS on the retained money of-the agencies which is 'nothing but Commission allowed by the assessee company, @10% u/s 19441. Since the assessee company has not done so, hence the assessee is in default u/s and 201(1A). Thus the total demand in this regard is computed as under:- 4.4. Being aggrieved, the assessee filed an appeal before Ld. CIT(A) wherein detailed submissions were made, which can be summarized as under: (i) Amount of discount credit deducted by the assessee from gross amount in the invoices is not a real expense of t....
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....ry important to understand the meaning of two words Commission can be defined as under:- i. 'Commission' is percentage or allowance of factor or agent for transacting business for another ii. "Commission" is compensation paid to another for service rendered in the handling of another's business or property and based proportionately upon the amour or value thereof" iii. "Compensation is paid for works measured by results achieved, iv. "Commission" generally denotes the compensation which a person can receive on sales" 5.3.1 A producer or manufacturer of goods generally does not sell his goods directly to the ultimate consumer. There are agents who purchase the goods from the manufacturer and sell them to the consumer. In a sense, such agents bring the manufacturers and the consumers together, for transaction. The remuneration which an agent gets for his services in the transaction is called commission. Most of the business transactions are made through intermediate persons 5.3.2 Trade discount is an allowance or rebate from the listed price granted by the seller to buyer. In other words, Trade discount, is an allowance made f....
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.... the appellant has appointed the advertising agency as their agent to bring the advertisement for sa1e of their airtime. There is nothing on record to prove that the advertising agency acted as an agent of the appellant. In this regard the sample of the invoices raised by the appellant as filed was perused and reproduced as under: Invoice raised by ENIL, on Lintas Media Group. Invoice No,211670 dated 15.03,2011 Advertiser Kokuyo Camlin Limited Gross amount 315,000 Agency Discount Credit 47,250 Subtotal 2,67,750 Service tax 27,578 net due 2,95,329 Invoice raised by on Lintas Media Group . Invoice No.211 671 dated 15.03.2011 Advertiser Kokuyo Camlin Limited Gross Amount 4,41,000 Agency Discount Credit .. 66,150 Sub Total 3,74,850 Net Due 38,610 4,13,4 60 Invoice raised by Lintas Media Group to Kokuyo Camlin Limited Invoice No, 1016010299 dated 1 4O4. 2011 Advertiser Kokuyo Camlin Limited Reimbursement of Broadcasting Charges 642,600 Service Tax 66,188 Total Broadcasting Charges - 'Reimbursement 7,08,788 Advertising Agency Commissio....
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....or bailee, when the same is calculated as a percentage on the amount of his transactions or on the profit to the principal. This was further elaborate in the decision of the Weiner vs Swales reported in 211 Md 123; is a fee paid to an agent or employee for transacting 'a piece of business or performing a service." 5:4. The discount, in general sense is', all allowance or deduction made from a gross sum on any account whatever; in a more limited and technical sense, the taking of interest in advance. It was further elaborated by Hon'ble court as a deduction from an original price or debt, allowed for paying promptly or in cash. 5.4.6 The Honble Gujarat High Court has also considered the distinction between, the commission and discount as explained by the Hon'ble Bombay High Court in the case of M/s.Harihar Cotton Pressing Factory vs CIT reported in 39 ITR 594 wherein it has been explained the expression; "Commission" has no technical meaning but both in legal and commercial acceptation of the term it has definite signification and is understood as an allowance for service or labour in discharging certain duties such for instance of an agent....
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....ale and purchase between the owner and the advertising agency And the said amount is required to be reduced from the gross price and therefore, the sale price is always ex-discount. 5.4.12 On the other hand, the commission is given only after the completion of the task or services or the sale, if it is on sale of products by the distributor or dealer to the retailer or consumers. When the distributor records the purchase price without reducing' the amount of so called discount, then the said benefit allowed by the assessee to the distributor, would not partake the character of discount.. 5.4.13 The assessee recognizes the revenue from sale of air time as per invoice/bills at which the airtime were sold 'to the advertising agency and the amount of discount is not separately treated as expenditure on account of sale of airtime and accordingly, not debited to the &L account. This clearly brings out the all case of the assessee to fall' within the ambit of discount. The assessee has not appointed the advertising agency as its agent directly or indirectly. No evidence on record is produced by AO to show that the advertising agency' was appointed by the ....
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....the CBDT Circular No.5/2016 dated 29.02.2016 regarding applicability of TDS provisions on payments made by television channels to medial agencies. It was also submitted that in subsequent years TDS returns were processed by the AO wherein no such issue has been raised and no such liability has been raised. 4.8. We have gone through the orders passed by the lower authorities and facts of this case and also the judgment relied upon before us. It is noted by us that now the issue of obligation of deduction of tax at source by the Television Channels or Media Companies upon the payments made to advertising agencies has been settled by the board in its circular No.5/2016 dated 29th February 2016. We find it appropriate to reproduce the relevant part of this circular as under: Sub: Tax Deduction at Source (TDS) on payments by television channels and publishing houses to advertisement companies for procuring or canvassing for advertisements. The issue of applicability of TDS provisions on payments made by television channels or media houses publishing newspapers or magazines to advertising agencies for procuring and canvassing for advertisements has been examined by t....
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....that no TDS is attracted on payments made by television channels/newspaper companies to the advertising agency for booking or procuring of or canvassing for advertisements. It is also further clarified that 'commission' referred to in Question No.27 of the Board's Circular No. 715 dated 8.8.95 does not refer to payments by media companies to advertising companies for booking of advertisements but to payments for engagement of models, artists, photographers, sportspersons, etc. and, therefore, is not relevant to the issue of TDS referred to in this Circular. 4.8. Thus, from the above circular it is clear that this issue is now settled in favour of the assessee on the basis of judgments of Hon'ble Allahabad High Court in the case of Jagran Prakashan Ltd. and Delhi High Court in the matter of T.V. Today Network Ltd. Both these judgments have been accepted by Hon'ble Supreme Court by dismissing SLP's filed by the department against these judgments. Further, relying upon these judgments, now Board has also taken a clear stand that no TDS is required to be deducted on the impugned payments made by the assessee to the advertising agency. Thus, we find that the order passed ....
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....on-restricted persons) with the prior permission of the Company. g. The In/Out time are not applicable for RJ's as they are not required to sign the muster. 5.2. But, AO was not convinced with the argument of the assessee, and after analysing agreement with RJs, it was held by the AO that TDS should have been deducted by treating the impugned payment as salary u/s 192, by observing as under: "From the above mentioned terms and conditions it seems that the Radio Jockeys are engaged by the assessee company on fixed compensation/fees and also the RJ are employed not for one year but also for three years. It is also seen that they are, eligible for annul performance bonus and they are at the discretion of the company to re-locate at any station. Further the RJ's are not allowed to do similar type of job with any other entity. In view of the above observations it is clear that there exists an employer-employee relationship between the RJs and the company. Therefore the company is suppose to deduct IDS u/s. 192 a' per applicable rate which is @30% on the payment to Radio Jockeys which is salary but not professional/consultaricy fees. Since the assess....
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....The A.O. has also, not brought any conclusive evidence on 'record to prove that RJ's are employees. In his order the AO has simply stated that it seems that RJ's are employees without corroborating it with 'any evidence. The RJ's are professional's and have taken other assignments too. The proof for the same is on record. In Income Tax Return also their income is shown as professional receipt and not as salary. Therefore, the assessee has rightly deducted tax at source/s.194J. The claim of the assessee is upheld and the addition of Rs. 61,03,334/- stands deleted: 5.5. During the course of hearing before us, Ld. DR relied upon the order of the AO. Per contra Ld. counsel of the assessee vehemently relied upon the order of the Ld. CIT(A) and further relied submissions made by the assessee before Ld. CIT(A). He also drew our attention upon the sample agreement enclosed in the paper book to impress upon the point that there was no employer-employee relationship. It was submitted that the RJs have offered the impugned income as part of the professional receipts and has been accepted as such. Nothing has been brought on record by the AO to show that if in any ca....
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....rightly pointed out RJs were not entitled for the various benefits which assessee company's employees were entitled e.g. provident fund, gratuity, retirement benefits etc. The agreements with them were for a specific period and assessee company was not bound to renew the same. It has also been noted by us that RJ's were free to take assignments from any company (except with any other Radio broadcasting company). They were not bound to act solely as RJs. Such kind of permissions cannot be given to employee. It is also worth noting that with effect from 1st July 2012, the Radio Jockeys were liable to pay service tax on the value of service rendered by them. The assessee supported this fact with the help of sample copies of invoices showing that service tax was charged by the Radio Jockeys. Thus, different treatment cannot be given under the income tax law and service law to decide the nature of the payments. 5.8. Further, on examination of various clauses of the agreement, it is noted that neither it is mentioned anywhere that RJ would be employee of the assessee, nor it can be concluded on the basis of holistic reading of the entire agreement that there was any employer-emplo....
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....ound that there is no employer and employee relationship and their payment cannot be treated to be salaries and, as such, deduction cannot be made under section 192 of the Income-tax Act 5.11. Similarly, in the case of ACIT v. Fortis Healthcare Ltd. (supra). Hon'ble Chandigarh Bench has taken a similar view. Relevant part of decision is reproduced hereunder: 20. To decide the issue whether TDS has to be deducted as per section 192 or 194J of the Act, the basic requirement is to interpret the relationship between the assessee and the doctors. Further, a distinction is also to be drawn between the 'contract for service' and 'contract of service'. This issue has been very aptly dealt with by the learned CIT (Appeals) in his order at para 5.1. The contract 'for service' implies a contract, whereby one party undertakes to render the service, for example professional or technical services, to or for another in the performance of which he is not subject to detailed directions and control but exercises professional or technical skill and uses his own knowledge and discretion. A 'contract of service' implies relationship of master and servant and ....